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Einar Aas and the Nordic Power Market Collapse

In 2018, Norwegian power trader Einar Aas defaulted at Nasdaq Clearing after extreme movements in Nordic and German electricity derivatives produced losses that exceeded the collateral available in his account. The positions were based on relative price relationships between regional power markets. When those relationships moved sharply against the portfolio, losses expanded rapidly and margin requirements increased. The case is useful because spread positions can appear less risky than outright directional trades when historical price relationships are stable. Under stress, however, the spread itself can move far beyond recent experience while liquidity becomes more difficult. The failure highlights concentration, margin risk, liquidity risk, and the danger of treating historical relationships as permanent.